Soaring food prices finally on the way down again

An age of soaring food prices appears to be ending, even though they're still rising far faster than prices as a whole.

While the official inflation rate rose just 1.9% for the year to June, food prices went up 7.5%, way above the average.

The food industry blames rising costs worldwide and falls in the value of the New Zealand dollar, but even a 7.5% rise is not all bad news, according to Tony Carter, who heads the supermarket giant Foodstuffs.

He points out that at 11% food price inflation was much higher earlier this year, so it's definitely trending downwards.

ANZ economist Khoon Goh thinks that trend will continue, and that food price inflation will eventually slide to between 2% and 4% - but the big earlier increases in the cost of food will not be reversed.

Back within Reserve Bank's target range

By falling to its lowest level in almost two years, the overall inflation rate is back inside the Reserve Bank's target range.

As measured by the Consumer Price Index, the 1.9% rise for the year to June is the smallest annual increase since September 2007. Just over a year ago the annual rate was 5.1%.